Rover buyer turns back on mass market

JON MOULTON: Alchemy’s managing partner answers questions on Rover’s future as a low-volume producer

When Rover was taken over by BMW, part of the reason was that they had not got enough money to bring on new models. How are you going to manage?

BMW’s problem was that it wasn’t big enough. Launching a steel car takes an investment of many hundreds of millions of pounds, and then you need to sell many hundreds of thousands, or ideally millions, to make any sense of the development cost on the car. We have no intention of trying to compete in the mass market where this massive investment is required.

If you’re going for a specialised market, you’re going to cut a lot of jobs at Longbridge.

We’re expecting to end up a smaller volume producer, and it is inevitable that jobs at Longbridge will go. We’re aiming for less than 100,000 units.

What will your models be like?

Very simply we’re going to copy what Lotus has been doing very effectively: using aluminium composites. This enables the firm to develop new models for tens of millions of pounds, rather than hundreds of millions.

Are you going to turn Rover into a niche sports-car maker?

We’re going to be a bit bigger than that. We will be selling things like a sports saloon range. We intend to be a medium-volume business. It’s a business model for which there are not many analogues in the industry, it must be said.

Can you say anything to reassure workers at Longbridge that they have a long-term future?

I’m afraid there are two groups of workers at Longbridge. There are people who are going to lose their jobs, which is bitterly to be regretted but inevitable. Then there is another group of workers who are about to get great opportunities. They will be part of a business that will be growing.

The company is losing the best part of a billion pounds a year at the moment. How, under any circumstances, can you turn it round to profit in a couple of years?

We need to cut the cost of running it, and to avoid the wasted expenditure there has been. We will have massively cut product development costs compared with those incurred by BMW and we will be able to see our way forward to make money on 100,000 units.

Will you be forming a partnership with any other car company?

We have no intention of doing so. But we are very likely to use somebody else’s engines and gearboxes because we will not have the volumes to support making our own.

Have you spoken to your existing suppliers?

We will be speaking to them in due course but we can’t do that until we actually own the business, which will be in a few weeks’ time.

Excerpts taken from Jon Moulton’s comments at a press conference last Friday.